How Do M&As Inspire Innovation?

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““How do M&As inspire How do M&As inspire Innovation”Innovation”

R Gopalakrishnan1

‘Conversation with India’

Imperial College Business School

London

Nov 10, 2008

What Innovation is - (1)

2

Impact of Innovation

Low High

Organizational Evolution

High

What Innovation is – (2)

Four types of InnovationFour types of InnovationFour types of InnovationFour types of Innovation

Difficulty of Replication

Foo

tprin

t of

Im

pact

3

4

PartnershipMode

M&A Lessons – (1)

Mindset

Share

Tell

Conqueror Expander

5

M&A Lessons – (2)

The connection between the domestic core business and the overseas expansion should be clear, defined and pursued with persistence

The connection between the domestic core business and the overseas expansion should be clear, defined and pursued with persistence

The post merger integration & processes must be consistent with the strategic intent of the acquisition

The post merger integration & processes must be consistent with the strategic intent of the acquisition

The absolute core and non-negotiable values of the acquiring company need to be explicit to the acquired company managers

The absolute core and non-negotiable values of the acquiring company need to be explicit to the acquired company managers

The positioning of the business in the host country should be harmonious with the actions of the company

The positioning of the business in the host country should be harmonious with the actions of the company

It is important to engage with the society in which the business is located, even if level of engagement is small

It is important to engage with the society in which the business is located, even if level of engagement is small

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M&A Lessons – (3)

Cross-Border M&A with regards to Commercial VehiclesCross-Border M&A with regards to Commercial VehiclesCross-Border M&A with regards to Commercial VehiclesCross-Border M&A with regards to Commercial Vehicles

Cross-Border M&A with respect to Social ApplicationCross-Border M&A with respect to Social ApplicationCross-Border M&A with respect to Social ApplicationCross-Border M&A with respect to Social Application

Cross-Border Acquisition through the Leveraged Buy-Out routeCross-Border Acquisition through the Leveraged Buy-Out routeCross-Border Acquisition through the Leveraged Buy-Out routeCross-Border Acquisition through the Leveraged Buy-Out route

M&A Lessons – TATA Novus (1)

Tata Motors Acquired Daewoo Commercial Vehicle Co on 29th March 2004

• Mainly on-road application

• Strong product support

• Mainly off- road application

• Limited Product support

High-end tippers: European Origin

Expensive, difficult to maintain

Conventional tippers: Indian Origin

Limited speed and Gradeability

M&A Lessons – TATA Novus (2)

Produced in an exclusive facility jointly set up by South Korean & Indian teams at Jamshedpur

Power &

performance of

High-end

tippers

Economy &

Support of

Conventional

tippers

M&A Lessons – TATA Novus (3)

Tata Chemicals acquired Magadi Soda in 2006

M&A Lessons – Magadi Soda (1)

Tata Chemicals learning

from Masai Leaders

Masai leaders learning

from Tata Chemicals

M&A Lessons – Magadi Soda (2)

In 2000, Tata Tea acquired Tetley in the largest cross-border deal by Indian company.

-Tetley was four times the size of Tata Tea- 1st Leveraged Buy-out (LBO) by Indian Company

M&A Lessons – Leveraged Buyout (1)

TATA have applied the LBO route to other Acquisitions

M&A Lessons – Leveraged Buyout (2)

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Thank You…Thank You…